In this article, we will take a look at the 10 biggest mortgage companies in the US. You can skip our detailed analysis of these companies, and go directly to the 5 Biggest Mortgage Companies in the US in the World.
A loan provided by a bank or a financial institution that assists a borrower in purchasing property is called a mortgage. The mortgage market in the United States has gone through numerous phases to attain its current status as the world’s largest, most creative, and complicated home-financing industry. The mortgage industry plays a major role in the US financial sector. Despite the fact that this industry has had some big downturns, such as the subprime mortgage crisis which occurred a little more than a decade ago, it has persevered and emerged stronger.
According to the most recent statistics from the Federal Reserve Bank of New York’s Quarterly Report on Household Debt and Credit, in the second quarter of 2021, there was a staggering rise of $282 million in mortgage balance bringing the total mortgage balance to a historic value of $10.44 trillion. Like any other industry in the world, the mortgage industry has experienced upheaval due to the COVID-19 pandemic.
The mortgage market pre-pandemic was booming with a robust origination volume, investor interest, price appreciation by the buyer, and an expanding credit box. The years 2020 and 2021 are years to be remembered in the industry. The pandemic caused a historic decrease in interest rate, as a result, refinancing activity reached new heights. There has been a significant increase in the number of buyers. According to the data released by Consumer Finance Protection Bureau’s Home Mortgage Disclosure Act, in 2020, almost every IMB saw origination volumes increase, with many exceeding $40 billion.
Trends Shaping Mortgage Industry
While several of the major IMBs increased business by more than 100% from the previous year, the depository banks lost ground. According to statista, JPMorgan Chase’s origination volume increased by 38 percent, while Wells Fargo’s increased by just 15 percent, and Bank of America’s overall origination volume fell due to a pullback. In the US, roughly 65% of houses are owner-occupied. Owner-occupied homes are a major source of revenue for the real estate market which is a big contributor to the overall economic growth. Changes in the housing market can have far-reaching consequences for the economy.
Household debt includes consumer debt and mortgage loans. Household debt has been steadily increasing since 2008. Housing debts are at a total of $10.3 trillion in 2021. Mortgage balances that are higher indicate greater economic recovery. In recent years, the household debt to GDP ratio has decreased, falling from 90% in 2011 to 79 percent in 2020. The ratio continues to decrease and the latest reports generated in the first half of 2021 show a value of 78.16%. The decrease in ratio has been primarily due to an increase in GDP. Mortgages are the most substantial portion of household debt; the mortgages have increased steadily in the past decade and stand at a value of $11 trillion.
Fannie Mae, a mortgage firm, predicted that home mortgage growth will decrease in 2021 after reaching historic highs last year. Home sales are expected to increase by 3.8 percent in 2021, while buy mortgage originations are expected to reach $1.8 trillion, up from $1.6 trillion in 2020. Because of this trend, major mortgage players like JPMorgan Chase & Co. (NYSE: JPM), Bank of America Corp (NYSE: BAC), Rocket Companies Inc (NYSE: RKT) and PennyMac Financial Services Inc (NYSE: PFSI) are set to experience growth in the coming months.
The mortgage industry contributes approximately 10% to the total GDP value. As discussed previously, the pandemic caused a drop in interest rates. This trend is expected to remain unchanged through 2022. The trends of accelerated purchases, most importantly from creditworthy borrowers, are expected to remain unchanged in the near future. However, as the number of applicants for loans is increasing, the financial institutions that assist in purchasing property are tightening the lending criteria. This is a mere contingency strategy to mitigate risks. These trends are expected to continue through 2022.
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With this contest in mind, here are the 10 biggest mortgage companies in the US. We picked the most notable and biggest players in the industry and ranked them based on their market cap. Preference was given to public companies.
Biggest Mortgage Companies in the US
10. Meta Financial Group, Inc. (NASDAQ: CASH)
Market Cap: $1.5 billion
Meta Financial Group, Inc is 10th on our list of biggest mortgage companies. Meta Financial Group, Inc. is a financial holding corporation situated in South Dakota. The Company engages in banking activities such as accepting deposits, making loans and providing a variety of other financial goods and services.
9. LendingTree, Inc. (NASDAQ: TREE)
Market Cap: $2.1 billion
LendingTree, Inc. (NASDAQ: TREE) is 9th on our list of the biggest mortgage companies. Located in Charlotte, North Carolina, LendingTree, Inc. offers an online consumer platform in the United States. LendingTree, Inc. (NASDAQ: TREE) primarily operates through 3 major segments: Home, Insurance, and Consumer. Through its Home segment, the company provides services such as purchase, refinance and reverse mortgage, home equity loans, real estate brokerage services.
In June LendingTree announced its Q2 quarterly report in 2021. Home segment revenue increased by 42 percent to $104.9 million in the second quarter of 2020, resulting in a profit of $39.0 million, up 1% from the previous quarter.
Through its consumer segment, the company offers numerous services which include credit cards, loans (personal, small business, student), credit card repair and debt settlement, and deposit accounts.
Like JPMorgan Chase & Co. (NYSE: JPM), Bank of America Corp (NYSE: BAC), Rocket Companies Inc (NYSE: RKT) and PennyMac Financial Services Inc (NYSE: PFSI), LendingTree, Inc. (NASDAQ: TREE) is one of the biggest mortgage companies in the US. Polen Capital, in its Q1 2021 investor letter, mentioned Lending Tree (NASDAQ: TREE). Here is what the fund said:
“We also exited our position in LendingTree. LendingTree is a two-sided marketplace in the consumer financial services vertical that connects borrowers with lenders. The company has built a brand over more than 15 years that offers savings to borrowers by having banks compete. The company had been acquired by IAC before the financial crisis and then was spun out in the worst of the global financial crisis (GFC). The company had a resurgence following the GFC by adding value in the mortgage market. The company used the strong cash flow generation in the model to expand into adjacencies and diversify the revenue base. The product offering has expanded over the years mostly through acquisition and includes credit cards, personal loans, and insurance.
This diversified strategy had paid dividends amid demand shocks, like the decline in demand for mortgages 18 months ago and then the demand destruction caused by the pandemic. However, diversification has some downsides. While it protects the company from major demand destruction shocks, in our opinion, it has made it hard to drive consistent long-term compounding as products have come in and out of favor due to macro factors. While we think that LendingTree has solved a unique problem, we do not believe it has the same compounding potential going forward and have exited the position in accordance with our process.”
8. Rocket Companies, Inc. (NYSE: RKT)
Market Cap: $2.4 billion
Rocket Companies, Inc. (RKT) is 8th on our list of biggest mortgage companies. Rocket Companies, Inc. is a holding corporation based in Detroit that owns a number of personal finance and consumer service companies.
In the second quarter of 2021, the company generated $2.7 billion in net revenue and $2.8 billion in adjusted revenue. In a mortgage, origination closed loan volume a total of $84 billion was generated by Rocket Companies, Inc. (RKT), with a 2.78 percent gain on sale margin.
Like JPMorgan Chase & Co. (NYSE: JPM), Bank of America Corp (NYSE: BAC) and PennyMac Financial Services Inc (NYSE: PFSI), Rocket Companies, Inc. (RKT) is one of the biggest mortgage companies in the US. In its Q1 2021 investor letter, Miller Value Partners highlighted a few stocks, and Rocket Companies Inc. (NYSE: RKT) is one of them. Here is what the fund said:
“We own Rocket Companies which we think is a great mortgage finance company with a successful history of innovation, growth, and cash generation. We think Rocket has several competitive advantages, including its technology and marketing platforms. One way this manifests is retention rates far superior to the rest of the industry (client and refinance retention rates of 80%+ versus less than 20% for the industry).
Rocket went public last year amidst record low interest rates that led to record revenues, margins, and profits. Rising interest rate concerns have kept a lid on the stock. We bought it last year after doing work on what the longer term potential looked like, as well as what earnings might be in a more normalized environment. We think Rocket is a great example of “time arbitrage.” We are taking the long view when others focus on the coming quarters…” (Click here to see the full text)
7. LoanDepot, Inc. (NYSE: LDI)
Market Cap: $2.4 billion
Loandepot Inc (NYSE: LDI) is 7th on our list of the biggest mortgage companies in the US. LoanDepot, based in Lake Forest California, is a non-bank consumer lender. Loandepot Inc (NYSE: LDI) offers home mortgage, home equity, prime jumbo, conventional agency conforming, FHA, VA and refinance products in all 50 states.
As reported in the company’s Q2 quarterly report in 2021, in the last quarter, the company’s mortgage transactions increased by 31%. As compared to the previous year, the increase was 87%. This huge turnover indicates the successful implementation of channel diversifying policies that were adapted.
Loandepot Inc (NYSE: LDI) also offers settlement services, which include captive title and escrow business; real estate services, which include captive real estate referral business; and insurance services, which include services to homeowners and other consumer insurance policies, which are also provided by the corporation.
Like JPMorgan Chase & Co. (NYSE: JPM), Bank of America Corp (NYSE: BAC), Rocket Companies Inc (NYSE: RKT) and PennyMac Financial Services Inc (NYSE: PFSI), Loandepot Inc (NYSE: LDI) is one of the biggest mortgage companies in the US.
6. Walker & Dunlop, Inc. (NYSE: WD)
Market Cap: $3.08 billion
Walker & Dunlop, Inc. is 6th on our list of the biggest mortgage companies in the US. Walker & Dunlop, Inc. provides commercial real estate owners with financial services. It is headquartered in Bethesda, Maryland, and has 38 locations across the United States.
According to the 2020 Mortgage Bankers Association loan origination rankings, Walker & Dunlop is the fourth-largest lender to the commercial real estate market in the United States. Over the last decade, Walker & Dunlop has increased its total lending volume by 25% annually, from $2.7 billion in 2010 to $24.7 billion in 2020.
In the second quarter of 2021, the company’s total transaction volume climbed by 90% to $13.5 billion, yielding $281 million in revenue, up 11% from the second quarter of 2020. Similarly, the company generated diluted earnings per share of $1.73, and adjusted EBITDA of $67 million, up 37% over Q2 2020.
Like JPMorgan Chase & Co. (NYSE: JPM), Bank of America Corp (NYSE: BAC), Rocket Companies Inc (NYSE: RKT) and PennyMac Financial Services Inc (NYSE: PFSI), Walker & Dunlop, Inc. (NYSE: WD) is one of the biggest mortgage companies in the US.
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Disclosure: None. 10 Biggest Mortgage Companies in the US is originally published on Insider Monkey.